Orange Company Had Machinery Destroyed by a Fire on December

question 13

Multiple Choice

Orange Company had machinery destroyed by a fire on December 23, 2018. The machinery had been acquired on April 1, 2016, for $49,000 and its adjusted basis was $14,200. The machinery was completely destroyed and Orange received $30,000 of insurance proceeds for the machine and did not replace it. This was Orange's only casualty or theft event for the year. As a result of this event, Orange has:

• A) $4,200 ordinary loss.
• B) $15,800 § 1245 recapture gain.
• C) $14,200 § 1245 recapture gain.
• D) $30,000 § 1231 gain.
• E) None of the above.

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Definitions:

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